Trader's Appetite Increases! This Is What Happens In The Financial Markets


 The US Dollar fell broadly on Thursday as investors grew more confident that US interest rates have reached record highs after the Federal Reserve decided to keep interest rates on hold earlier today.

Sterling remained steady after the Bank of England kept rates at their highest level in 15 years and stressed that they do not expect to cut rates anytime soon.

Fed Chairman Jerome Powell left open the possibility of another hike, but with the funds rate target at 5.5%, the highest in 22 years. Markets are taking that as a green light to continue keeping the less than 20% chance that rates will rise in December. The yield on the 10-year US Treasury bond fell 24 basis points from Wednesday's high, stocks rose and risk-sensitive currencies jumped.

"Powell had the potential to raise some concerns with the latest increase in short-term inflation expectations, but he chose not to," said Kristoffer Lomholt, head of FX research at Danske Bank. "It was possible to send a more hawkish signal but he chose not to and I think that's what made the market react."

The US dollar index, which measures the dollar's value against six other major currencies, fell 0.5% to 105.94 and was down about 1% from Wednesday's high.

The pound was up 0.6% against the dollar to $1.2222, the highest level in 1-1/2 weeks after the BoE decided by a 6-3 vote to keep rates at a 15-year high of 5.25%, while ruling out a rate cut in the near future.

The euro strengthened more than 0.8% against the US dollar to $1.0654, the Swiss franc was higher for a second day and the yen found further support from a one-year low at 150.07 against the US dollar.

The yen has tried to find a pace, although the Bank of Japan on Tuesday made another reduction in its yield control policy.

A drop to a one-year low of 151.74 against the US dollar and a 15-year low of 160.83 against the euro after the BoJ announcement had traders eyeing possible intervention measures to support the currency.

The Australian dollar, which jumped 0.9% on Wednesday, strengthened by 0.7% on Thursday to touch a near five-week high of $0.6446. The New Zealand dollar rose 1% to a two-week high of $0.5910.